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gregmey
gregmey, CPA
Category: Finance
Satisfied Customers: 147
Experience:  Certified Public Accountant & Certified Financial Planner
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Do I have to report non covered securities (provided by the

Customer Question

Do I have to report non covered securities (provided by the trading broker through 1099-B) on Schedule D? I guess no but wanted experts opinion.
Submitted: 4 years ago.
Category: Finance
Expert:  gregmey replied 4 years ago.

gregmey : Hi, my name is Greg and I'm happy to help you with your question today.
gregmey : You do have to report non covered security transactions on Form 8949 which flows to schedule D. form 8949 is a new form this year and requires reporting of cost basis for all covered securities. Therefore, you are not required to report cost basis for the non covered securities but you still must report the sale and subsequent capital gain that is reported on 1099-B.
gregmey : You want to make sure the total proceeds on your Shedule D matches the total proceeds reported by your broker on the 1099-B. This is an audit flag for the IRS if it does not match.
gregmey : Please let me know if you need further clarification or have any additional questions. Thanks, Greg.
Customer :

If I do not enter the cost basis, then it shows as a profit. how should I go about it?

gregmey : Are you using software or preparing it manually? If you are using software, you enter the cost basis in the software program but you do not need to report it on form 8949. If you dont enter cost your gain/loss will not be correct. There should be a box in the software where you check that this is a non covered security which tells the software how to treat it.
gregmey : If you are not using software, report the proceeds and cost basis on Form 8949 but check Box B in Part I at the top of the page.
Customer :

I am using the software but has nothing to check the box

Customer :

what should I enter the cost basis?

Customer :

should I enter the cost basis as same as the sale basis?

gregmey : Does your 1099-b show cost basis?
Customer :

No it does not show any thing

gregmey : What type of transaction is this?
Customer :

It shows Box 6 as a non covered

Customer :

gives the box 1a

gregmey : Do you have record of how much you paid for it?
Customer :

and it shows Box 2

Customer :

nothing on Box 3

Customer :

this 1099 b was given by the broker

Customer :

I don't think I have a record of that

gregmey : You may want to contact the broker and ask them why there is no cost basis. If you don't put in cost basis you will overstate your gain. However, if you get audited you will have to show how you calculated your cost basis amount. I suggest asking your broker first.
Customer :

do I need to mention whether it is a RSU, NQSO? so on?

Customer :

ok

gregmey : If it's an RSU then you may not have cost basis.
gregmey : If you did not pay anything for the RSU and were just granted it by the company then you won't have any basis in the security.
Customer :

I don't think so but I was looking at last year tax filing where the tax preparer was mentioning against the stocks

Customer :

do I need to mention them? if so how do I know it?

Customer :

how do I know if it is ESPP?

gregmey : With an ESPP you would have basis.
Customer :

but do I need to enter it on Schedule D?

gregmey : If you sell your securities, then yes.
Customer :

what is CUSIP

Customer :

I did sell them but my 1099-B does not show that

gregmey : It is an identifying number for security. It would be listed on your 1099b if it is applicable.
Customer :

every thing is included in base price

Customer :

in what way does it help me?

Customer :

how should I enter the stock is ESPP or RSU? Should I write it on description?

gregmey : In the description you should write what is reported on your 1099, which is probably the security name.
Customer :

on 1099 B they did not mention whether it is RSU or ESPP or so on

Customer :

previous tax preparer mentioned under each stock less gain already included in compensation

Customer :

what does that mean and how should I write that? where should i write it?

gregmey : RSU or ESPP is more a matter of how you acquired the stock and not how you report it on your tax return. You should enter what is on the 1099b. If you have questions on what plan the sales relate to I would suggest calling your broker.
Customer :

ok

Customer :

on W2 they mentioned V under 12c column where and how to report that?

gregmey :

This is to report the income from the sale of non statutory stock options. This amount is also included in box 1 of the W2. You should input this number in the 12V box on your form W2.

gregmey :

If you sold this stock it should be listed on your 1099-B and you should report it on Form 8949 and Schedule D.